Rather than attract new buyers, the car makers' lower prices have raised consumer expectations of a price war that they hope will produce even better deals for those prepared to wait.

Reducing car emissions is very expensive

Such optimism could prove unfounded.

Last week, the association of European car makers, ACEA, warned that forthcoming EU regulation could push up the price of every European car by 5,000 euros (£3,330; $6,270) in a decade.

The industry's outcry was a frustrated response to the European Commission's recent decision to stick to its targets for CO2 emission cuts despite vociferous opposition from car makers.

Lobbying

Last month, a delegation of European automotive executives - including Volkswagen's Bernd Pischetsrieder, Renault's Louis Schweitzer, Fiat's Giuseppe Morchio and Ford's Sir Nick Scheele - travelled to Brussels to meet both the president and the vice president of the Commission, Romani Prodi and Loyola De Palacio.

But despite such high level meetings, little progress is being made by the industry which wants less red tape and, more importantly, more time to implement emission cuts.

The automotive executives are having to tread carefully.

Urging laxer controls is tricky given that current emission reduction targets are voluntary.

Their biggest worry would be if impatient Commissioners might hit back by legislating.

But there is hope for the car makers yet.

Given that the automotive industry accounts for 4% of the European Union's gross domestic product and employs thousands of people, the Commission has a vested interest in helping secure the sector's health.